LOS ANGELES – A Hacienda Heights couple pleaded guilty today to federal fraud charges related to their participating in a scheme that generated millions of dollars by soliciting investments in a company that purportedly offered children’s educational courses – but in reality was a pyramid scheme designed to generate revenue by adding new investors.

Cheong Wha “Heywood” Chang, 48, and Chang’s wife, Toni Chen, 47, each pleaded guilty to one count of wire fraud and admitted that they made materially false representations and omissions in order to induce people to invest in a series of Hong Kong-based companies collectively known as CKB. With other names that included WIN168 Biz Solutions, Ltd.; CKB168 Ltd.; and Cyber Kids Best Education Limited, these companies claimed to generate substantial profits from the sale of web-based children’s educational courses. The scheme operated from at least September 2012 through at least the beginning of 2014.

Chang and Chen each admitted that made false statements to investors, including: CKB was a successful and profitable business; with each investment of $1,380, an investor would receive “Profit Reward Points” (PRPTs) that were worth $750 and could be exchanged for money; PRPTs would increase in value as a passive investment, even if investors did not actively recruit new investors to CKB or sell CKB courses; and PRPTs were analogous to, or could be converted into, pre-IPO or future shares of CKB that would increase greatly in value when CKB went public. These statements to investors were false.

Authorities have yet to accurately determine the amount of losses suffered by victims in this CKB scheme, but in their plea agreements Chang and Chen admit they received approximately $2 million as a result of the fraud scheme.

“These defendants defrauded investors out of millions of dollars, and then they attempted to obstruct justice when the Securities and Exchange Commission filed a lawsuit,” said United States Attorney Eileen M. Decker. “The fraudulent conduct in this case has harmed many people, both in the United States and abroad.”

Chang and Cheng will face up to 20 years in federal prison when they are sentenced by United States District Judge Dale S. Fischer on February 6, 2017.

Three other defendants who are charged in an indictment that was filed last summer – Wen Chen “Wendy” Lee, Daliang “David” Guo, and Chih Hsuan “Kiki” Lin – are scheduled to go on trial before Judge Fischer in November. These three defendants are each charged with one count of conspiracy and 13 counts of wire fraud. The indictment alleges that the defendants collected approximately $30 million from CKB investors.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

This case is the result of an investigation by the Federal Bureau of Investigation.